(Bloomberg) -- Ecopro BM Co. signed a long-term contract with Samsung SDI Co. to provide a key ingredient for electric-car batteries, despite higher interest rates curbing demand for battery-powered vehicles.
The Cheongju, South Korea-based firm inked a contract Friday with Samsung to supply cathode-active materials worth 43.8 trillion won ($33.5 billion) between 2024 and 2028, according to a company filing released after the stock market closed in Seoul. The cathode is based on nickel-cobalt-aluminum chemistry and is used for high-nickel batteries, Ecopro said in the filing.
Ecopro’s cathodes will be provided to Samsung’s plants in South Korea and abroad, the filing said, without elaborating. Samsung is planning two battery plants jointly with Stellantis NV in Kokomo, Indiana, and has a plant in Hungary.
The massive deal comes as carmakers slashed sales targets for EVs with higher interest rates hurting automobile purchases. Meanwhile, the Biden administration has set rigorous limits on sourcing battery minerals from China and other foreign adversaries. That has created an opportunity for countries like South Korea along with challenges for them to reduce their heavy reliance on Chinese components.
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Ecopro seeks to have a 710,000 tons of cathodes by 2027, including 180,000 tons now just in South Korea. It’s building its own plant in Hungary and another in Canada jointly with SK On Co. and Ford Motor Co.
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